The American Healthcare System: How We Got Here and Where We Are Going, October 19 2018



mm-hmm oh good morning everyone it's my pleasure this morning to introduce dr. Larry Dean I am sure all of you know Larry well but I'll just point out a few salient points from the title of Larry's talk you can see that he has developed perhaps not a new interest but a sort of focused interest on how healthcare delivered their delivery is done and particularly here at the University of Washington many of you may know he hopefully know he took on a new role in u-dub medicine recently around clinical clinical products and smart innovation which is really to look at the way we purchase utilize products particularly in some of our high-end places such as the cath lab bars and so on and some of the faculty have sort of joined him in that committee you know this is also reflected nationally and the roles that he's taken on as the president of sky and more recently on the ACC appropriate use community and task force that is coming out regulated with guidelines for cardiologists of an appropriate use of various modalities that we use so um with no further ado I'd like to have them come up and the title of this talk is American healthcare system how we got here and where we're going so thank you it's a pleasure to be can you hear me okay okay it's a pleasure to be here this morning is Rob alluded to as I started thinking back on my career this is an area that I've actually participated in kind of fell into it I guess for lack of a better way of describing it when I started managing cath labs at my former institution and then got involved more in hospital based economics so I've been involved in this for quite some time really was one of the reasons I came back the University of Washington having been a resident here a number of years ago also the thing about this presentation this morning which you will find I think intro hopefully interesting perhaps is if there's not gonna be a case report case presentation there are no p-values there no kaplan-meier curves there's no linear regression meta analyses or any of that so we're gonna talk about the economics of health care particularly as it focuses on hospitals and physicians and at the end of this I'm going to give you some thoughts about where we're going I wish I knew where we were going but I will use some of my thoughts about this so look at ory conflict of interest I don't have any for the fellows and faculty who take boards I'm Emily cardiovascular board writing committee and nothing in this presentation will be on those boards I can assure you of that so lecture outline here we're gonna talk about how we got here indeed and to talk about that we have to talk about the history of health care in United States and I'm not gonna go back to the 17th century or something like that or 18th century but we will go back over a hundred years to look at this talk about the current burning platform it's not the current burning platform this the problem of the cost of health care in the United States has been an issue for many many years a little bit about how we get paid because it's important to understand how we get paid both hospitals and physicians to understand some of the malalignment of the way we get paid in the United States some future new payment models that are on the horizon matter of fact occurring currently and you get a little bit of an alphabet soup as you start talking about this when you start dealing with the government just like the military there are initials for almost everything and we'll cover some of that and then the conclusions I said a moment ago a little bit about where I think we're going to be going here at least in the short term so to remind everyone in the room in 1847 the amount of the AMA was established so again many many years ago and then we had a whole group of things that occurred in the early part of the last century ama in 1910 had about 70,000 member members with the Flexner report looking at medical schools and education and medical students around 1910 that had an impact in 1904 there were about a hundred and sixty medical schools in this country decade or so later 66 so a lot of medical schools in this country closed around the findings of the flexin report in 1913 the American Association for labor legislation so the early work with labor unions comes out and and develops a conference actually on what they called social insurance and this is kind of the first time at least in the United States where this concept of having health care as part of our social construct was really discussed but then things come along and you'll see a pattern here things come along to derail the conversation a bit 1917 course before that's when war once actually started the United States enters World War one and 1917 that sort of stops a lot of the conversation about health care reform so 1928 we're gonna pick it up here General Motors reaches out Metropolitan Life of Life Insurance Company to say hey we need some coverage for our workers this is where this concept of insurance as part of your workplace or as a benefit to the employment starts being discovered but being from discussed and it's about 180,000 workers at that point but what else happened what happened in 1929 the depression right so things change so these conversations start and then something happens to be read a little bit but in 1929 Blue Cross was established actually in Dallas Texas and there here was the deal if you give me 50 cents a month for a year or six dollars a year I will cover 12 to 21 days and our hospitals in Dallas it was really directed towards the teachers and community so that's it again a prepaid notion in other words you give me six dollars and now we'll let you have 21 days in the hospital then BlueShield a year later Blue Cross was established for Hospital reimbursement in economic reimbursement and Blue Shield was established for physician reimbursement the other thing is playing in this whole conversation is the turn of the last century you went to hospitals to die basically and now we're developing in this early part of the century the ability to treat various diseases surgical procedures and all those kinds of things which you go from 50 cents to or 6 dollars a year to get you 21 days in the hospital and it's getting more expensive the things that are being developed so that's the thing is playing in the background here as well in 1935 FDR shepherded through Congress the Social Security was established at that point along with that was actually a proposal for universal health care but it did not make the cut and so all we got out of the 1935 effort was Social Security was very important part of our country but that again was initially etad with healthcare as well in 1938 another famous name pops up and that's Henry Kaiser obviously Kaiser Permanente at least the beginnings of that and again this was set up as a paid a prepaid plan for his workers so again we're back to the economics of this being driven by where you work and who you work for is it GM is it Kaiser building ships etc these early notions of this ok 1941 again this is the 30s and now something else happens 1941 United States enters World War two at that time administration FDR but wage and price controls so the inflation didn't increase as we were trying to produce all the ships and tanks for the war effort and so to attract potential employees all companies could do it couldn't have to offer them more money but they get offer their benefits and one of the things that they started offering or health benefits again this notion that your health benefits are tied to what you do work 1945 FDR dies in office 1955 Truman offers actually a national health plan and it's really interesting because it was denounced in the House of Representatives as a communist plot fast forward to today's conversation so a lot of this is not new 19th so we're gonna start talking about the cost of delivering health care in 1950 healthcare was about four-and-a-half percent of the gross domestic product of GDP 1965 we finally did Johnson President Johnson signed into law the Medicare Medicaid provisions so now we have health insurance for a certain population certain populations that are paid for basically by the government 1970s health care was six point nine percent so it's gone from four point five to six point nine percent 1973 Richard Nixon actually sort of cut of codifies or codifies HMOs what is it what are the requirements etc etc and interestingly President Nixon who was Republican had the notion of having universal or at least everyone being covered by health care and that was in 1974 I remind you what happened in 1974 he resigned as president of the United States and that was the end of that conversation so again something else to interrupt the conversation about health care and how we provided in this country nineteen eighty eight point nine percent of GDP health care nineteen eighty-three things were getting the the increases in the cost of delivering health care were rapidly escalating and Reagan decided to change the way hospitals were paid hospitals used to be paid I put I use all this equipment I used to do all these things to you here's the bill to pay me for what I did what happened in not in the 1980s with Reagan as he said no no hospitals are gonna get paid for an episode of care if you come into the hospital with heart failure you can do whatever you want to with that patient you can do six echos and five calves you're gonna get one payment for that encounter okay and that's the beginning of this concept it was developed again to try to rein in the cost of health care what did it do not much Gulf cares 12.1 percent of GDP in 1990 the clintons again they try to go through they try to reform healthcare if you start looking at the Nixon proposal and the Clinton proposal and ACA or Obamacare they are very similar actually there's not a lot of difference amongst those so the clinton started in 1992 again because health care costs are growing very rapidly to try to do something about that they failed fast forward a few years later 2000 health care is 3.3 percent of GDP 2010 in March of 2010 what's called Obamacare over the Affordable Care Act was passed the ACA and then in nineteen and in 2016 three point three trillion dollars or about 20 19 or 20 percent of the gross domestic domestic product of this country is in health care so again despite all these things that were attempted health care costs are increasing and these are societal cost of course there is a there is a cost to the individual as well so it's a product of as I mentioned a moment ago they need to have healthy productive workers that's really the way that's started if I don't have a worker who could come to work and build my ship then I have a problem and that's what was really the underpinnings of this as I mentioned a minute ago are building up provide advanced care I mean we've developed all kinds of techniques and we have to pay for that some way and 1890 you went to a hospital to die as I mentioned a moment ago the cost of providing that care again things have become more expensive technology has been developed over all these years and and and the cost of delivering the care has gone up and I mentioned a moment ago the vagaries of war the national international tumult wars stock market crashes presidents resigning all kinds of things impacted is the need to provide care to the elderly and retirees again part of the Social Security Act than past and then quite frankly politics has been playing a major role in all of this again it's a communist 1945 as a communist plot to consider universal health care United States and it continues to this day so before we get into this you need to look under stand a little bit about the terminology and and so this is hospital finance 101 everyone I think in this room probably understands it when you go to a hospital and and there are certain charges the insurance company does not pay those charges they pay a discounted rate of those charges so if they charge a dollar let's say the hospital gets 40 cents of that okay so there's no connection between what it actually costs the hospital it's just a percentage of their charges revenue is what we actually get paid the direct cost is the cost of providing that care in other words a stent an echo a stress test etc then we have the indirect cost not in this building because we're past the double doors but if you go in the hospital somebody's got to pay the electricity bill and the water bill and all the other things that are common to the providing providing that care in that space to make it work the margin is what we have left to spend what we can what we can invest in our practice what we can invest in buying new equipment and then the thing that's becoming more and more discussed right now is this notion of value can health care so what is that thing well value this is the way it's defined is quality divided by cost is the basic equation so there's two ways to increase value several ways to increase value can decrease cost and maintain quality you can easily increase quality maintain cost or you can increase quality and decrease cost those are the three ways to impact value the end of the day value is what we're paying for that particular product right this gets if you break it a little bit further it's the outcomes if you look at the quality plus the patient experience which has been more and more discussed nowadays and the cost of these direct and indirect direct cost I talked about them a moment ago the actual cost of providing the care but turning our attention back to the cost of health care – I suspect have seen a slide like this if not this exact slide and this is the total health expenditures in the United States as a part as a percentage of gross domestic product as I alluded to earlier in 2015 it was about 18% this is rounded up to 20 percent of the gross domestic product in this country what does that mean just to give you a little bit of an idea in 2010 and it was two point six trillion 2016 it's over three trillion dollars and that's just smaller than the entire German economy so this is a lot of money what does it mean when you break it down and some people don't like these slides but at least in 2016 the average cost in the United States for your health care per person is about $10,000 if you look at other countries here Switzerland's next in the line but it ranges all the way from about 4,000 to about 8,000 Switzerland has a private public it's not quite like the rest of Europe where it's all basically public we support it so in Switzerland you're required to have insurance at Birth basically and if you live in Switzerland to have insurance individually now there is support from the government for people who can't afford that but nonetheless it's a it's a private insurance based product in Switzerland but you can see there there's quite a difference in comparing European countries to United States well what impact does this really have now this is I think a telling slide and the blue and black down here you have overall inflation in there blue is workers earnings pretty reasonably flat and this is a cumulative increase over those years between 1999 and 2017 when you look in the in the orange that's the family premium that's the increase in the premium that the average family in the United States is paying and then other thing is essentially on this slide is the worker contribution in other words people or being asked to contribute more to their health care than has that what they have done in the past and those are both rising far more rapidly than their earnings for example Corinne in this country so I think we have a problem here that's not really sustainable if you look at a different way this is looking okay what's the payoff basically life expectancy no is sort of a gross tools like mortality but you know essentially so you know there are other ways of looking at this but if you look at life expectancy what are we getting for that increased cost to our system well Japan has a higher life expectancy that we have we're on the bottom of this Germany sector Switzerland's second so we're not getting a lot of payoff for that significantly increased expenditure or cost of health care in the United States dialing down a little bit more this is also very telling slides if you do this sort of average of comparable countries that's the blue line here again it's the life expectancy is generally increasing but if you look at the Green Line which is United States it's also increasing but if this was a kaplan-meier curve you'd be a little concerned about the fact that they are they were separating as time goes on so we in addition to the fact that yes life expectancy is increasing in general throughout the world our life expectancy is not increasing to the same level or the same rate as other countries comparable countries so I think we still have a problem so we have a problem from the standpoint of the cost and the cost that we are being asked to bear in this system and then we had a problem with our with a life expectancy as it paid back to that there have been some successes low and I have to put a couple of cardiology slides in here and this is looking at the heart disease and stroke statistics from the 8hj and you know since 2000 there's been about a 20% decrease in cardiovascular mortality United States so there has been a benefit but it's not across all the population such as cardiovascular disease so some other slides to give you a little bit more of a foundation about what this really means in practical terms in 2005 and this is gonna look at from time to time added about the cost of health care for GM for example about $1,500 when they looked it forward it was more than them it was more expenditure for healthcare than the metal the steel that goes into the car and with respect to healthcare calls it's about $71 per worker per hour that's a huge number just think about that every hour in Japan and Toyota it's about half of that almost so what has been driven by primarily I'll getting a more detailed here in a moment there's a disc there's a disconnect a little bit physicians at least at this point have been paid for the services that they deliver if I read an echo I get paid if I read an ECG I get paid if I see a patient clinic I do a cardiac catheterization I get paid for each one of those procedures hospitals I said a moment ago different prospective payment system that PPS you get to pay for an episode so if you come in with a diagnosis of X you get paid a certain amount of money for that diagnosis again there's a mile alignment between what the physicians are getting paid how they're getting paid and reimbursed and the hospitals there's a problem with variations in care which I'll touch on and at the end of the day at least until more recently there's been very little connection between the quality of the care that's being delivered and the cost of that care it's just been you tell us tell us how much it costs will pay that again there's a conversation now occurring some incurring actually for several years around time quality to the cost of the care so do we know what the cost of carry is I get these questions all the time my patient doesn't have any insurance how much does it cost to have at a bar done okay so this is an interesting thing this is interesting so this is a hospital in Wisconsin and they're charged for a total knee was $50,000 and they've got a little concern because they got a little feedback from the people who pay the bills that we think that's too much money but the reason it got to be $50,000 is not set in meetings in hospitals with this exact conversation we're gonna increase our chargemaster by three to four percent per year period it's got nothing to do with inflation we're just gonna put it out there and see who pays that amount money it's not it's not based on anything and so that's like compounded interest it winds up at fifty thousand dollars so they did a study they actually had industrial engineers come into this hospital and look at exactly what it cost based on the time procedures etc etc and that cost was about ten thousand dollars that's what it actually cost although the charge was fifty thousand dollars and if you do a discount on that let's say it's half of that the hospital is gonna the insurance company's gonna pay $25 like twenty five thousand dollars but it didn't cost the ten thousand dollars to produce that if you go to any hospital and say how much does it cost for X they will struggle with this number because they don't really know it because this is how you get to these exorbitant amounts of money as the cost of providing that care and again if you have insurance your insurance company is not painting that cost what's driving the cost this actually comes from University of Washington this is from the IH M he group here it's an actually an interesting article if you're interested in this subject it's in JAMA last year and it's tried to look at the five they broke it down into five things that might be driving the cost things like population size the age the disease prevalence or incidence service utilization number on how many clinic visits how many bad days did you get in your hospitals service price and intensity and in this period of time between 96 and 2013 the Delta there and that change in the cost of care was over 900 billion dollars so how much of it came from the different parts of this in general if you look at the different diseases it's it does vary some diabetes for example cardiovascular disease is slightly different than this but this is the overall results of the study certainly as the population increases we have more people that drive some of the cost of health care we're aging I Drive some of the cost of health care interestingly their prevalence and the service utilization didn't really drive the cost of health care here but what drove most of this almost 600 billion of the 900 billion was service price and intensity how much you're charging for each service and how much of that service you're providing that's what drove about over half of the cost or in this particular period so this argument they will get getting older there's more of us that is important yes it does Drive part of the cost but the thing that drove most of the cost here was again the service is being provided and the intensity of those services so then every time I give a talk like this or have a conversation with physicians they want to bring up the fact well you know the reason the cost of care is going up is because we are practicing defensive medicine in other words we don't want to get sued so we're gonna do everything we can think of in case so we don't miss something defensive medicine this is a look at that of course it's from a law journal so you have to be a little biased perhaps but there are other studies looking at this and this is in Texas and if you look at the the circles that's overall Texas and in 2003 Texas passed significant malpractice reform where they camped non-economic damages to $250,000 and that you click did this study to see that at any impact on procedures perform see for all of Texas no you know didn't change what actually went up a little bit if you look at El Paso went up a little bit did not go down you'd expect if this was defensive medicine if you pass reform it would go down correct and then you know McAllen is sort of the poster child for variation in delivery of health care same state boy he didn't have anything to do with it all and a lot of variation in care between El Paso and McAllen technical in Texas so it doesn't appear to be related to defense practicing defensive medicine either variations in care I'll go through this really quickly again back to a cardiology example of this this is looking at PCI and I just picked this this is from the Dartmouth atlas that has picked a couple of the different states I'm from Alabama originally yeah mid mid 2000s there was a lot of PCI this is rates of PCI per thousand it's in patients over time is we've developed evidence I'm thinking better treatments for patients medical therapy etc that has come down but there's still a difference and if I blew this up you see that there's about a 1.5 fold difference between the lowest in this particular analysis versus the highest for and race as well and you could argue if you look at that there may be a difference between the population and Alabama versus the population in Washington State there probably is when I can tell you when I came here it was palpable the difference in the in what I was singing the cath labs with respect to athis cottage disease so there is some difference here but is that difference really Mecca really explained this variation in care for now I don't think so so who's to blame well this is perfect the government lawyers businesses insurance companies health care providers or the consumer consumers are coming inside won't that reap a that I see on TV that's a joke they're not driving much of this I'm not gonna go over this for a second I will go over this actually so so in 19 to the Clintons the Clintons tried to change the way we deliver health care in the United States were unsuccessful this is a 1993 when Hillary Clinton was involved and I had the opportunity at that point to go to a meeting that was an Alabama at that time and the CEO of Blue Cross Blue Shield of Alabama it was all this conversation about HMOs and what was Hillary care and all this kind of thing and he said I don't care what you call it I just want to remind you who my customer is and some of you in this room have heard me say this before who his customer is it's not the patient who isn't as the people who are buying the insurance is the employers is the Microsoft's is the Costco's that is their that is their customer and they're going to give product to that customer that allows them to be successful they are selling a product so if it's an HMO or there's some kind of discounted service or what do you want to call it they're gonna come up with something they can sell to these companies because that's what they do for a business so it's not about the patient this also comes up why can't mr. Smith have his tab are done here it's because we don't have a contract with that company and they're not in the end they and they're not interested in giving us a contract for whatever reason our cost whatever but deploying is their responsibility as to whoever's paying that bill and the bill for that insurance for that particular patient is not coming from a bylaw it's not coming from the patient is coming from their employer so they're gonna protect employer I'm not going to show that just to tell you there's there was a couple of things and I'm just gonna put this up here for just a second there was Harry and Louise early in 1993 when Clintons were trying to change things Harry and Louise were saying you can't do this you're gonna force us to you know I don't even take our choice away you're gonna force us to to pick from a few insurance companies that's not right fast forward when I start talking about Obamacare for ACCA ACA in 2009 same same actors they've aged there's they're talking about well we've got to have pre-existing conditions covered we've got to have access to care it's the same people doing the acting but different people are paying for the acting and so the message is different this is very interesting but again I won't go into it in detail but Jimmy Kimmel I'm sure most of you know went to the street and asked people about the ACA and Obamacare most of you have sort of seen this and it rate is all the way from yeah we won't we like ACA better than Obamacare because ACA is a portable Care Act it's more affordable than Obamacare you realize it's the same thing this lady right here well you realize that that Obamacare is going to result in our guns being taken away from us and she said absolutely I'm not kidding and at the very end of this little vignette there's a lady and they walk up they say hey you know a CA and Obamacare are the same you know what she said now you're kidding you're trying to make me look stupid on TV so how do we get to where we need to be yeah when we have a public that's uninformed or misinformed but again yeah you go to youtube and look it up it's actually quite interesting I'm not running too long here so just to remind you the the the Obamacare of the ACA had three primary goals Affordable Health Care in other words including more people expand the Medicare program although that was a state as a state based program so mint state not all say had to do that and all of them did but lastly and most importantly they'll come back to this in a moment support innovative medical care delivery through different methods of paying for that care this comes back to that quality or a value-based care notion did have an impact it sure did this is in 2010 about 20% of population was uninsured it's cut in half so it had an impact I'm getting more care to more people so go ahead and how do we get paid as I mentioned mama go hospitals get paid a fixed payment there are some adjustment for severity of illness and outliers but especially a fixed payments where are we on that list of Medicare this is Medicare payment average of reimbursement for Medicare beneficiary we're number 45 there aren't many things in the state of Washington where we come out number 45 and the cost of delivering care or anything else but we're down here at eight about $9,000 New Jersey's $12,000 does that have an impact you bet it does I won't tell you what program profitability this is but this is our own internal data here this is all payers commercial insurance Medicare Medicaid the profit in this particular group of DRGs about a million dollars if you look at Medicare it's almost a three million dollar loss so the way this all gets balanced is your commercial rates if you have a low commercial number of commercial payers and you're sort of portfolio and you've got all Medicare you're gonna lose money on that patient population so that fact that we get reimbursed at a very low rate for Medicare in the state of Washington is actually hurting our ability to take care of some of our patients what impact does this have is this notion of no margin no mission this is MD Anderson they had a tough financial year this is Sutter Health profits plummet 80% this is the Brigham and Women's they again by bought out 1600 workers this is the Cleveland Clinic not clearing clinic still making a profit don't get me wrong but but they're there their growth was significantly impacted by a lot of this and then you've got st. Joe's quarter one loss you've got sweet here locally who laid off 550 jobs they need a more cost-effective model is what they said so this is having an impact these changes in reimbursement particularly Medicare as we age or having a significant impact on the financial viability of inst hospitals this looks like this is again you over this pretty quickly if you look at just the negative hospitals in the United States with negative margins however you want to define that it's about twenty to thirty percent so twenty three percent of hospitals in United States have negative margins if you have a negative margin you can't buy the new cath lab you can't buy you can't build a new clinic space you have to have that money to be able to use to provide the care so what's the problem downward pressure on revenues I said a moment ago bled mostly by about Medicare private payers though they're paying attention as I said that you know 1990s Blue Cross Blue Shield reminded all of us who their customer was not the patient probably payers there's about four companies in nine states have over eighty percent of business and it's a business and so if everyone else is decreasing the cost and they've got to go to Microsoft to sell the product that they have and Microsoft won't pay whatever it is then they're going to decrease the cost because that's their business that they're in so the commercial business is also involved in this as I mentioned a moment ago what we've been paying for equipment Pharmaceuticals that work force it etc are increasing as well but if you have revenue downward pressure and Hospital revenue and you've got an increasing cost that's where you get these negative margins however the top insurers are doing pretty well these are the margins operating margins of the Aetna's UnitedHealth etc and it's about five to eight percent so they're doing pretty well and they're going to continue to do well because again the customer is the business if they're a private insurance company their fiduciary responsibility is to their shareholders it's not to the patient so what about closer to home what about uw-madison the impact yeah I just want to share this with you I don't want to dwell on it too much and we've got a problem here within uw-madison if we don't fix our problem that blue line on the bottom is going to be our prop big problem so now we're trying to improve our financial performance across the system so we can get back up to a profitable situations so about 278 million of improvements over the next several years we need about a two and a half percent positive margin in 2020 and Rob alluded to this is kind of where I've gotten involved looking at the price of the products that we purchase across the system to try to impact this as well so fit again I'm not gonna get into a lot of detail here it's really designed to change the way we look at things mmm we've operated as individual hospitals we're now going to start operating as a system to try to bring pressure to bear on the providers for example other products that we buy again it supports UW medicines overall goals it's not a standalone project this is not we're gonna do this for the next two years this is gonna be a new way of dealing with the way we deliver care in the system it's got several different initiatives are there's a revenue growth there's a cost savings piece and there's some infrastructure here as well so it's not just the cost of things that we do it's improving access it's looking at getting paid for what we actually do also very important turning our attention now to occurred in future payment models and mostly around physicians okay so as I said a moment ago fee-for-service are we use we do an echo we get paid a certain amount of money the physician does its for the volume of services delivered it's not a per diagnosis reimbursement the future is gonna be value-based care and this Metis Medicare access and chip reauthorization act called Macra is something if you haven't heard about you will be hearing more and more about because this way that medicare is looking at this quote the HHS egg chase secretary in April there is no turning back to an unsustainable system that pays for procedures rather than value so this is real and coming the old model used to talk about the system this sustainable growth rate as physicians we didn't like it get rid of a Congress Congress got rid of and guess what we got macro so I'm not so sure we got a great great deal in the difference here the reason for that is that Congress was not kept kicking the can down the road and we were going to pay back 25 percent of our position got to have 25 percent pay cut in order to balance the budget in Medicare so that was a reason one of the reasons they changed it and so now we're going to talk about the quality payment program not again very complicated like most things in the government but Macra has replaced this sustainable growth rate as a way of compensating physicians for their services MIPS again you can what that stands for but I'm just going to use the in acronyms MIPS for weighted components quality is the most important so I said a moment ago we're gonna get start going to start being paid for quality resource utilization how much stuff we're using clinical practice improvement and then use of electronic health records and other modern more modern technology there's a composite score there there's an adjustment to reimbursement it ranges all the way from minus 4% in 2019 to plus 4% in 2019 in the next three years it's going to go up to about nine percent plus or minus so we are at risk we can lose reimbursement or we can gain reimbursement depending on what that composite score comes out where this is all headed as a last bullet point are these advanced alternative payment models or ATMs and this is sort of like if you've heard of bundled payments in other words you come in the hospital you need bypass surgery it's a little bit like what the hospitals have been paid before we're gonna give you a lump sum provide that service in the first 90 days after that service that's all you're getting physician fees echo echoes done ECG is done bypass surgery you're gonna fix fee that's called a bundled payment that's gonna become more and more important as we go forward it will be tied to quality though it's not just about paying a certain amount and there's a downside risk if you don't meet if you charge more than what they're willing to pay or if your quality is not where it should be you're gonna get a negative consequence to that you're not gonna get paid what you think you should be paid how is it here within UW Medicine you haven't heard about mips here primarily because it's been focused more on ambulatory care and primary care but it's gonna be coming and i said a moment ago the plan is to move to ATMs and we did successfully submit tubes the government and we had a successful submission so we didn't take a loss on these particular parameters but this is not just CMS the Washington State Health Care authority CMS says that they want 50% of their reimbursement to be value-based by the end of this year and they're moving to higher than that over time ninety percent HD at Washington HCA by 1990 about 2021 and CMS is actively encouraging the private payers to get involved in this process as well so this is the last slide where we where are we going I don't know but it's gonna be different than what we've done over the last number of years I think it's likely to get worse before we're forced to make meaningful change do I think universal health care is coming to this country I don't think so we've been trying to do it for a hundred years unless things collapse it's probably not gonna happen but we're gonna have some variation on what we've been talking about we need better align between hospitals and physicians that's coming again bundled payments I'm paying you a certain amount of money for bypass operation Hospital position the whole thing somebody tied to quality as I mentioned we need to uncouple I believe any uncouple healthcare from employment again it we had a reason a century ago to do this but we're not in that same reason now we have to have a productive and healthy population and also healthy and productive employees as well so we are moving from this no mission no margin this getting paid per unit to no end no outcomes no incomes in other words this value-based proposition that this is about delivering value for the cost that's being paid as well and again this is this MIPS and APM's piece so but um I guess half full the glass is half-full kind of guy is this gonna bend that cost curve I showed you a minute ago that percent of GDP that's now 20 percent I'm not so sure we're all bunch of smart people every time they change the rules we figure out a way to maximize our reimbursement again this is not gonna meaningfully change it I don't think I think it will have some impact but I think given time we'll figure this out just like we figured out how to document the medical record when we see a patient in clinic the things that we're going to put in there to get a certain level of service we figured it out we're going to figure this out too so I think we're gonna get back to this conversation about universal healthcare but I think it's going to take again GDP gets to 50 percent it's not sustainable we can't compete in the world if we're paying that much for health care and we're not getting the attention but again thank you very much that's a great question the answer is yes it costs more in the United States pharmaceutical prices are higher stent prices are higher I mean someone gave an example of this they were having conversation with somebody from Germany and the cost of that the stent came up ours is about $900 per step and they're paying like two or three hundred or a hundred some number you cannot believe and they were astounded that we were paying that much money so an answer your question it costs more in the United States yes idea that that the us essentially well there is conversation within the current Congress around pharmaceutical prices we'll see where that goes but I think the other thing about your question to these but maybe a little bit more of an answer is the way we when we cut the price per unit we just do more units and that's the problem in the United States I believe and again that slide sort of alluded to that it's the intensity of the services being delivered not necessarily how much each one costs although that is important but if you have a system which there's no feedback loop do you think about this and all you're gonna get is volume over here and there's no feedback loop to that volume it's only human nature if somebody's gonna say you can't do that much and they cut the price you're just gonna do more right that's that's what happens that's what's happened over all these years so we have to have a fundamental change in the way we deliver health care and the way we pay for it because if we're just gonna do unit based on we're just gonna do more volume which is alluded to if you look at Texas that's what happened there well you know it's gonna be so I said I don't think it's gonna happen because there are too many players unions companies who want their employees to be able to work I think I think that if you did something like Switzerland you know if Switzerland's got a higher cost but they have really good outcomes at least for life expectancy where you basically mandate that you as an individual have to have the insurance and you give that ability for that person to buy that insurance and if you can't afford it then it's subsidized by the government but it's not all subsidized by the government it's probably most palatable to the United States but it would take a monumental shift in perception to get even there but to go to completely universal health care what we're all paying into a system everybody's got access I think that's going to be very difficult to do but a public-private solution might work yes that's a great question and it's difficult what's being used so far things like rates of ACE inhibitor using heart failure treatment of blood pressure treatment of hypercholesterolemia well I think that's I think other thing about this is that when you look at the macro level which is what I've talked about here it all kind of make it does make a little bit of sense but when you get down to the to the on the frontlines kind of level a lot of this information is based on billing codes procedure codes and things like that and in an individual it may be that there's a reason that person's not on an ACE inhibitor this is not in a chart for example so I agree with you it there are some sticky pieces to this to make sure but my macro level if I'm the government or a company paying for this it does make some sense yeah it's a good point I think the difference perhaps is that it's across the country so if you are risk avoid if you if you risk avoid New York you're not gonna be able to go to Michigan necessarily now you the argument you would make is maybe we're gonna under treat patients so I think we have looked historically over treatment I think the argument that we need to make when we go forward with this is that we need make sure we're not under treating people later most almost all of what I talked about is potentially over treatment least some of it but we got to make sure we don't under treat people either what happened in New York I think is a good example of that if you if you nationalize the approach to this and you and you have mechanisms in place that you can look at under treatments that's a quality outcome to I think that's how you take care of it but we've got to get to the point where we're not looking at over utilization we're also looking at under utilization but you know we'll see how it goes I think it's going to start with odor you know the easiest thing to do is to cut his to cut the overutilization trying to deal with under utilizations more competent okay okay we got one more I think they're making noise there [Applause]

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